The most common driver of target market selection is the past experiences of the entrepreneur. It is very true that your own industry experience and relationships can fuel your venture. We generally point out that if you can pencil together a plan to reach $1 million in revenue through your personal relationships, then you are most likely heading in the right direction. However, your past experiences can also be a trap leading you to a poor market decision.
The key point here is that in order to be a market leading company, you and your team members will need to outsell and outperform your competition. So ask yourself if your particular skills and relationships would be perceived by customers in this market as impressive and convincing. If you do not possess all the tools you need, are you in a situation where you can convince others to join your team and complete this picture?
A good example of this characteristic is the founding team of Castle client A2 Access
. Working in one of the world's most successful hedge funds, they were in position to identify a true problem and solution that applied to their industry. Then they had the market-specific
relationships, network and credibility necessary to open doors and sell into the top hedge funds and investment banks, enabling them to quickly build up a nice business, which resulted in their acquisition by Dealogic
this summer. A team from outside this business would have never pulled that off.